Is My Payday Lender Licensed in My State? Here’s How to Find Out

Payday loans can quickly trap you in a cycle of escalating debt. If you’re in that trap, one of the first steps toward freedom is to find out if your lender is licensed in your state.

Stuck in payday debt?

DebtHammer may be able to help.

How to determine whether your payday lender is licensed

If you’re struggling with paying a payday loan, you need to know whether your lender is licensed. If your lender is not licensed, your loan may not be legally collectible, meaning you may not have to pay it.

Each state has an agency tasked with licensing lenders. This may be the state Attorney General’s office or the state agency handling financial regulation. Check the table above for the regulating body in your state, and check with that agency to see if your lender is licensed.

Your lender should also be able to produce a license number or other evidence of licensing. Don’t be afraid to ask. If they are legit they will be willing to prove it. If they aren’t willing to show a license, that’s a red flag and you should look closer.

Find out where the lender is based

It’s important to determine the actual identity and location of your lender. If your lender is based in a different state they may not have a license to lend in yours. Again, beware of lenders based on Native American tribal territory.

Some payday lenders or the companies behind them may be based outside the U.S. This is a red flag and may indicate an illegal lender or scammer. Run searches on your lender — both under the business name or the name on their license, if they have one — and see what you can learn.

Some online lenders may advertise themselves as check cashing services that give you time before negotiating your check: for a steep fee, of course. Always read the fine print, understand the costs and know what will happen if you cannot pay.

Watch out for online lenders

About 73% of payday loans are still made at physical locations, but online lenders are gaining in popularity. Online lenders also present unique problems. 

A study by the Pew Charitable Trusts found online lenders are “more expensive than those offered in stores” and account for the majority of consumer complaints. Many are set up to renew automatically. If you can’t afford to repay your payday loan, costs can mount quickly.

Those complaints often involve aggressive collection practices, calls to employers and repeated attempts to withdraw money, resulting in high overdraft fees.

Be particularly wary of online “tribal lenders” based on native American reservations. These lenders may invoke the sovereign immunity of tribal groups to escape state regulations. They charge extremely high fees and often use highly questionable business practices.

If you’re stuck with a tribal loan you can’t afford to repay, DebtHammer can help. Contact us today to schedule a free consultation.

Are payday loans legal in your state?

Payday loans are not legal in all states. Some states ban payday loans entirely or impose requirements that lenders aren’t willing to meet. Many states require payday lenders to be licensed.

Payday loans are legal in these 31 states

Alabama, Alaska, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, North Dakota, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.

Payday loans are not legal in 19 states

Arizona, Arkansas, Colorado, Connecticut, Georgia, Maine, Maryland, Massachusetts, Montana, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Vermont, Washington D.C. and West Virginia.

New Mexico currently permits payday loans, but they will be illegal starting on Jan. 1, 2023.

Payday loan laws and licensing requirements

Use the table below to determine if your lender is licensed.

Are you stuck with a bad payday loan? Here are eight ways to escape:

Safer alternatives to payday loans

Payday loans are a fast, easy way to get emergency cash, but the cost can be extreme. Consider these other ways to get out of financial trouble.

  • Cash advance apps like Brigit, Dave and MoneyLion will give low-cost advances to help you through to your next paycheck. You’ll have to sign up before you need the money!
  • A credit card cash advance is an expensive option, but it’s still much cheaper than a payday loan. Pay it off as soon as possible, and don’t get into the habit of relying on them.
  • Many banks and credit unions offer payday alternative loans, which designed these products to help their customers avoid the payday loan trap. Ask your bank or credit union whether they provide this alternative.
  • Installment loans like a personal loan or peer-to-peer loan can also provide the cash you need. It may be hard to qualify if you have bad credit.
  • Borrowing from friends or family is embarrassing, but it’s better than falling into the payday loan trap. Take your loan seriously and pay it back fast!

Remember that while payday loans seem like an easy solution, they can create a bigger problem. Before considering a payday loan, you should look closely at your options and do everything possible to find a better way.

The bottom line

Times are tough right now, and a lot of Americans are struggling. Many people caught in the payday loan trap blame themselves. More than 90% of payday loan borrowers end up regretting their original loan. Remember that these loans are intentionally and carefully designed to trap you. That’s their purpose. You may regret taking the bait and falling into the trap, but that regret won’t get you out of the trap.

If you’re in that trap, you need to take action and consider your alternatives. You probably won’t be able to pay the loan because it’s designed to be unpayable. You need to look for another way out. Finding out whether your payday lender is licensed in your state is a start.


What is the difference between a title loan and a payday loan?

 A title loan is secured by the title to a vehicle. A payday loan is unsecured. Both types of loans have very high interest rates and can quickly trap you in a cycle of debt.

What does deferred presentment mean?

A deferred presentment is a transaction where a lender gives a borrower money in exchange for a post-dated check. The lender is cashing the check but presenting it at a later date in exchange for a fee. A payday loan may be treated as a deferred presentment.

Why do payday lenders require post-dated checks?

Payday lenders usually ask for a post-dated check or authorization to withdraw from your bank account. They do this so they won’t have to wait for you to come and pay them: they simply deposit the check or make a withdrawal. If you don’t have the funds in your account you’ll be hit with steep fees from both the lender and the bank. If you’ve granted your payday lender authorization to withdraw money from your bank account and the money is not there, take these steps to stop the transaction.

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